"The Hidden Agenda: How Governments
Use Inflation To Redistribute Wealth"
by Nick Giambruno
"Inflation is the single biggest threat to your financial well-being. That’s not exactly a revelation for most people. However, propaganda muddles the issue, so there is a lot of confusion. Though he was wrong on just about everything, John Maynard Keynes was on target when he said: "Lenin was certainly right, there is no subtler, no surer means of overturning the basis of existing society than to debauch the currency. This process engages all the hidden forces of economic law on the side of destruction, and does it in a manner not one man in a million is able to diagnose."
What is inflation? How is it measured? What is coming next, and what can the average person do about it? I’ll break it down and clarify these fundamental and crucial questions.
Inflation is one of the most misused words in the English language. The original and correct meaning of inflation is an increase in the money supply. However, the government and their court economists in academia and the mainstream media have redefined inflation over the years.
Since its founding in 1828, Webster’s Dictionary had defined inflation as "an increase in the money supply." Then in 2003, it changed the definition to "a rise in the general price level." The difference might seem subtle, but it’s not. It’s a deliberate deception. Redefining inflation this way confuses cause and effect, which is exactly why they did it.
Price increases are not inflation. Instead, they are an effect of inflation - an increase in the money supply. When inflation is redefined as "a rise in the general price level," many people are confused about what is happening and who is causing it. Inflation seems to come out of nowhere. It would be like redefining robbery to mean "a mysterious property loss," as if there was no robber.
The reality is that inflation is 100% a political phenomenon. Neither the local grocery store, the pharmacy, the restaurant owner, nor foreign scapegoats are responsible for inflation. The government - with its monopoly control over the currency - is. Governments inflate the money supply to generate more money than they could through direct taxation and issuing debt. In short, inflation is a hidden tax the government takes from its citizens without their consent.
The Real Way To Measure Inflation: There are two main ways to measure inflation:
#1. Based on the government’s definition of inflation (increase in the general price level)
#2. Based on the correct definition of inflation (increase in the money supply)
The former is prone to political manipulation and consistently understates reality. The latter gives an accurate picture.
When you hear about inflation in the mainstream media, academia, or from some government official, they are talking about the Consumer Price Index (CPI). The CPI measures changes in the price level of a weighted average basket of consumer goods and services. However, there are several significant flaws with the CPI.
First, it assumes that "a rise in the general price level" can be distilled to a single number. However, prices do not increase uniformly across the board, as seen with big-ticket items like medical care, college tuition, and housing, which tend to rise much more rapidly than other things.
As shown in the chart above, it is evident that price increases are unevenly distributed and cannot be condensed into a single number. The rise in prices is an unevenly distributed vector, with prices of scarce goods and services rising faster. Moreover, every individual has their own preferences, meaning their desired basket of goods and services will differ. For example, someone in Los Angeles will have a different basket than someone in rural Montana.
Trying to quantify a general increase in prices as a single number for over 334 million people - as the CPI claims to do - is an impractical task. It’s even more ridiculous than using a national average weather temperature to indicate what clothes you should wear for the day.
Second, the government gets to determine what items are included in the CPI and their weightings in the index. They can cherry-pick the items to show the least possible price increases. It’s like letting students grade their own papers. In short, the CPI is a worthless statistic. It’s misleading government propaganda intended to conceal the government’s hidden inflation tax.
Yet, most people incorrectly equate inflation to the CPI because government officials, the mainstream media, and academics repeat this falsehood, and most people thoughtlessly accept it as gospel. The real way to calculate inflation is intuitive and uncomplicated.
You don’t need to perform complex math calculations or have an advanced degree in economics - anyone can do it. All you need to do is look at the change in the money supply. Doing so eliminates much of the noise, political manipulation, and propaganda of the CPI to get a clear picture of what is occurring.
It is no surprise that the government prefers people to focus on a nebulous statistic like the CPI rather than the change in the money supply. That’s because when you look at the change in the money supply, it becomes clear that the government is engaging in a staggering amount of currency debasement. In short, the Federal Reserve has recently created more money out of thin air than at any other point in US history. Since 2020, the US money supply has skyrocketed by 36%, an incredible change in such a short period.
If your after-tax wealth has not increased by 36% since 2020, then you are not keeping up with the Fed’s monetary debasement. You are losing ground and on the road to serfdom. It’s just an anecdote, but I don’t know anyone whose after-tax wealth has grown by 36% since 2020. I imagine that most people don’t know anyone, either.
As bad as the situation with inflation is right now, it’s nothing compared to what is ahead of us. The coming money printing could be unlike anything we’ve ever seen before. Unfortunately, there’s little any individual can practically do to change the course of these trends in motion. The best you can and should do is to stay informed so that you can protect yourself in the best way possible.
Thanks to rampant inflation, socialism - and the poverty it inevitably brings - could soon become irreversibly entrenched in the United States, just as it has in numerous Third World countries. Rapidly rising food, housing, medical, and tuition costs are squeezing Americans, many of whom fail to grasp the true cause of their declining living standards. The explosion in the cost of living is a predictable consequence of the Federal Reserve's ongoing currency debasement.
Consider this. Imagine working 9 to 5 for 50 years, only for the Federal Reserve to print 40% of the money supply and inflate away 20 years of your hard work. You don’t have to imagine - it actually happened during the Covid mass psychosis, when governments around the world indulged in a frenzy of currency debasement. In other words, if your after-tax wealth hasn’t increased by 40% since 2020, you aren’t keeping pace with the monetary debasement.
As Michael Saylor aptly put it, "The road to serfdom consists of working exponentially harder in order to earn a currency growing exponentially weaker." It’s no wonder an increasing number of people are struggling to make ends meet. It’s like running on a treadmill that only tilts steeper and speeds up. I have no doubt the Fed will soon engage in even more egregious currency debasement.
The Federal Reserve is Your Enemy: The Federal Reserve is back in the news, preparing to launch yet another round of currency debasement - what it euphemistically calls "monetary easing," a term the media mindlessly parrots. Whenever discussing the Fed or central banks, it’s essential to keep the basics in mind. You have to start with the most fundamental concept: central planning doesn’t work. That’s the first principle.
Central planning of shoes doesn’t work. Central planning of wheat doesn’t work. And central planning of (fake) money doesn’t work. Central banks in general—and the Fed in particular - are on a mission impossible. They don’t know what the interest rate should be. Nobody does. That’s something only a voluntary market of savers and borrowers, dealing in honest money, can determine. A politburo can’t centrally plan interest rates any more than it can potatoes. They are inevitably going to fail—and cause significant damage in the process. It’s also crucial to remember that central banks have nothing to do with the free market. They are, in fact, the antithesis of it.
In Karl Marx’s "Communist Manifesto", central banking is the fifth plank. Meanwhile, the lying media portrays central bankers as selfless bureaucrats heroically trying to save the economy. It’s a load of BS. Central bankers are the enemies of the average person - the driving force behind currency debasement and the primary cause of the spiraling cost of living.
From Inflation to Socialism - and Worse: Even though the media won’t admit it, the Fed’s currency debasement is the primary reason most people are feeling the sting of rising prices today. They know it’s getting harder and harder to maintain their standard of living - but few understand why. They’ll blame supply chain problems, Vladimir Putin, or greedy corporations- anything but the Fed, the true source of inflation. The media’s hunt for the "real cause" of inflation is like O.J. Simpson’s search for "the real killers," only more absurd.
The deliberate confusion surrounding inflation opens the door for opportunistic politicians promising supposed freebies to ease the pain. Tragically, many fall for this siren song. Perverse as it is, the very policies sold as solutions to inflation only make it worse. Inflation perpetuates itself like a heroin addiction - people keep craving more of the very poison that’s destroying them. For instance, a Newsweek poll shows that 63% of Americans "strongly support" government stimulus checks to fight inflation. In other words: let’s combat the effects of currency debasement by engaging in even more currency debasement.
The more inflation erodes living standards, the more people clamor for misguided government interventions - universal basic income, price controls, rent controls, inflation "relief" checks, and higher minimum wages - all of which fuel the same destructive cycle of rising prices. It’s only a matter of time before "Fight for $15" - the rallying cry for a $15 minimum wage - becomes "Fight for $20," then "Fight for $50," and eventually "Fight for $100."
Instead, people should fight to end the Federal Reserve and the counterfeit money it creates out of thin air and forces everyone else to use. That’s the only way to break this insidious cycle that impoverishes everyone except the politically connected insiders closest to the printing press. But of course, that’s not what’s likely to happen. The more probable outcome is that the US continues down an inescapable spiral - a political-inflation doom loop that follows a predictable pattern:
1. In a fiat currency system, the government inevitably prints ever-increasing amounts of currency to fund itself.
2. This makes prices and living costs rise faster than wages.
3. The average person feels the pain but doesn’t understand why.
4. More people support politicians who promise freebies to ease the pain.
5. To pay for those "freebies," the government prints even more currency.
6. The result? More inflation - and the cycle repeats.
Most of America Depends on the Government: At this point, we have to ask ourselves whether the political situation in the US will improve. Unfortunately, the evidence points to a troubling but inevitable answer: no. The reason is simple - an ever-growing number of US voters are now net recipients of benefits from the government. This also includes the vast number of government employees and those in the nominally private sector who feed off the warfare state - defense contractors and other firms that thrive on massive, no-bid government contracts.
Those involved in the military-industrial complex live off government largesse as much - or more - than those collecting food stamps and other traditional forms of welfare. Yet they’re rarely counted in the statistics. Any honest accounting of who depends on the government must include them. When you tally everyone living off political dollars instead of free-market dollars, the number easily climbs north of 50% of the US population. In other words, the US has already crossed the Rubicon. There’s no going back.
The growing majority of voters who collect net benefits from the government form a built-in constituency that will perpetuate policies financed by ever-increasing inflation. That’s a major reason why I believe ever-increasing currency debasement is inevitable. Most people have no idea how bad things can get when the political-inflation cycle spirals out of control - let alone how to prepare for it.
The price of groceries, medical care, tuition, rent, and everything else will continue to rise. The only question is: how fast? This is an established trend in motion - one that’s accelerating and nearing a breaking point. And when that break finally comes, those who understand what’s happening and prepare accordingly will be in a vastly different position than those who don’t."
